National Apartment Rents Hit New Milestone, Demand for Small Apartments Catches Up with Family-Sized Rentals

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Key takeaways:

  • The national average rent reached the all-time high of $1,405 in June 2018, having increased by 2.9 percent year over year, and by 0.9 percent ($12) month over month, according to Yardi Matrixdata.
  • Rents increased in 88 percent of the nation’s biggest 250 cities in June, remained unchanged in 10 percent of cities, and dropped in 2 percent of them compared to June 2017.
  • The top 20 fastest increases in the country were registered in small cities, where population migration and the strengthening economy are accelerating rent growth.
  • Manhattan has had the largest year-over-year rent increase of the past 12 months, June having brought a 1.5% increase after a year-long period of decreasing or stagnating prices.
National-average-rent-June-2018

Comparable growth across unit types – Small apartments rev up in June

With renting gaining popularity among families, two- and three-bedroom units were the main drivers of rent growth so far in 2018. June’s increases, however, were almost perfectly balanced among unit types as the demand for studio and one-bedroom units caught up and even outpaced the two-bedroom segment. Three-bedroom homes cost 0.8% more compared to a month prior, $1,714. Two-bed units have seen a somewhat bigger month-over-month increase (although they lagged behind the other categories in yearly comparison), 0.9% to $1,489. Meanwhile, one-bedroom apartments and studios have seen their rents rise by a full percent, to $1,271 and $1,239, respectively.

Bedroom
Type
Average RentChange
M-o-M
Change
Y-o-Y
Studio$1,2391.0%2.9%
1 Bed$1,2711.0%2.9%
2 Beds$1,4890.9%2.8%
3 Beds$1,7140.8%2.9%

For rents broken down by unit type in the 250 largest U.S. cities, check out our interactive table at the end of the report.

June brings 2.9% upswing of the national average rent, crossing the $1,400 threshold

The average rent at national level has reached an all-time high of $1,405 in June. Compared to last June’s average, this translates into a 2.9% increase – in other words, renters pay on average $40 more per month than they did a year ago. Month-over-month, national rents grew on average by 0.9%, or $12, since May – a significant growth compared to previous months.

None of the rental mega-markets of the country escaped steep rent increases this month. Orlando took 1st place by proportional increase as well as dollar-value, where renters now pay 8.4% or $107 more compared to last June. TampaPhoenix and Las Vegas apartments also cost 6-7% more than a year ago. Las Vegas has also reached the $1,000 milestone since last year, same as Jacksonville and San Antonio. Renters in Manhattan were also in for an unpleasant surprise after a long period of decreasing rents, followed by a couple of months of stagnation or very sluggish growth. The average Manhattan apartment now commands $4,116, an increase of 1.5% or $60 – the biggest growth in the past 12 months.

One Year Rent Changes in 20 Renter Mega-Hubs

CityJune
2018
June
2017
Percentage ChangeNet Change
San Antonio$1,000$9792.1%$21
Indianapolis$839$8093.7%$30
Austin$1,336$1,3062.3%$30
Dallas$1,171$1,1353.2%$36
Fort Worth$1,068$1,0313.6%$37
Atlanta$1,394$1,3552.9%$39
Houston$1,092$1,0484.2%$44
Columbus$908$8635.2%$45
Jacksonville$1,034$9874.8%$47
Chicago$1,879$1,8292.7%$50
Charlotte$1,187$1,1354.6%$52
Washington$2,135$2,0802.6%$55
Phoenix$991$9316.4%$60
Manhattan (New York City)$4,116$4,0561.5%$60
Seattle$2,063$1,9993.2%$64
Las Vegas$1,007$9417.0%$66
Denver$1,597$1,5304.4%$67
Tampa$1,278$1,2036.2%$75
Los Angeles$2,368$2,2774.0%$91
Orlando$1,387$1,2808.4%$107

Small cities continue to dominate the national market in terms of rent growth

The thriving oil-industry hubs of the Permian Basin, Midland and Odessa have been leading the nation with rents growing at a spectacular rate since the last significant drop in oil prices. The latest data shows a 38.8% increase in Midland compared to June 2017, whereas Odessa rents have increased by 36.6% on average in the same period. Lancaster, CA enters the top 5, where rents have seen an alarming 10.2% growth rate over the past 12 months. The 9.9% rent increase in Reno, NV means The Biggest Little City in the World has maintained the its position from last month, when it had posted a 10.7% gain. The Phoenix suburb of Peoria, AZ climbs to 5th place, registering a 9.6% Y-o-Y increase in rents.

Brownsville, TX has seen many of its economic indicators improve lately, however, the already extremely low rents are heading in the opposite direction. This trend has earned the border town the top position on our list of cities with the fastest-decreasing rents last month: apartments cost on average 1.9% less than last June. Norman, OK, follows with a 1.8% decrease in rent prices over the same period in 2017. Renters in Baton Rouge, LAMcAllen, TX and Lubbock, TX have also seen their rents decrease by 1.3%, 1.2% and 1.1%, respectively.

Large cities: Las Vegas and Phoenix rents continue fast ascent

Although Detroit had overtaken Las Vegas for a brief moment, rent prices in Sin City are again the fastest-growing nationwide in the large category, having increased by 7% since June 2017. Phoenixhas climbed two ranks to 2nd place nationally, posting a 6.4% higher average rent compared to one year prior. San Diego also claims a place on the podium with no less than a 5.2% increase. Columbusand Jacksonville complete the top 5, where renting now costs 5.2% and 4.8% more, respectively.

Renters can breathe a sigh of relief in Baltimore, where rents have pretty much remained the same as 12 months ago, and Manhattan and Queens have also kept rent growth at bay, both having registered growth rates of under 2%. Oklahoma City and San Antonio are neck-and-neck with a moderate 2.1% increase in 12 months

Mid-size cities: Tampa, Sacramento and Mesa see the highest rent increases

Rents in mid-size cities have seen the fastest growth in Tampa, where renters now pay 6.2% more for their apartments than they did the same time last year. Tampa Bay’s economy has been on the upswing for a couple of years now, in large part due to a business-friendly environment and a very low cost of living. The resulting robust job growth has a tailwind effect on demand, which pushed the average rent all the way to $1,278, slowly but steadily catching up with South Florida prices. Sacramento and Mesa follow in a 5.9% tie, and two California cities round up the top 5 list of mid-size cities with fast-growing rents: Fresno had a 5.7% rent growth and Stockton registered a 5.5% increase over the year.

None of the mid-size cities have registered negative rent growth, however the three cities with the slowest-increasing rent prices have not even reached 1% Y-o-Y. Rents in Lexington, KYTulsa, OK and Wichita, KS stagnated, while in New Orleans, LA and Omaha, NE they rose by 1.7% and 1.8%, respectively.

Small cities: Midland and Odessa unrivaled, rents decrease in 12 markets

With people as well as businesses rediscovering the advantages of small cities over the costly urban hubs, small cities are living up to their potential for spectacular growth – and that’s true for their rents too. In this regard, June’s shockers were Midland and Odessa, TX, but the Lancaster, CA, Reno, NV and Peoria, AZ housing markets have also had remarkable rent growth. Other small markets with fast-rising rental prices include Hollywood, FLRialto, CASan Bernardino, CANorth Las Vegas, NVOrlando, FL and Gilbert, AZ, in all of which rents have increased by more than 8% since last June.

On the other hand, we have seen negative rent growth only in the case of a couple of small southern markets, mostly in Texas. Brownsville, TX renters paid 1.9% this June compared to the same period in 2017, Norman, OK rents are 1.8% lower. Baton Rouge, LA has seen a somewhat slower, 1.3% decrease in rents, followed by McAllen, TX with -1.2% and Lubbock, TX with -1.1%

Top 10 Highest Rents in June 2018

CityStateAverage Rent
ManhattanNY$4,116
San FranciscoCA$3,561
BostonMA$3,374
San MateoCA$3,269
CambridgeMA$3,111
SunnyvaleCA$2,945
Santa ClaraCA$2,902
Jersey CityNJ$2,880
BrooklynNY$2,801
San JoseCA$2,744

Top 10 Lowest Rents in June 2018

CityStateAverage Rent
WichitaKS$639
BrownsvilleTX$675
TulsaOK$676
KilleenTX$699
ToledoOH$703
AmarilloTX$730
IndependenceMO$733
DaytonOH$737
Oklahoma CityOK$741
Fort WayneIN$750

Unsurprisingly, Manhattan, NYC is still the most expensive rental market in America, rentals here command on average $4,116, $20 more than last month. Rents in San Francisco, CA have seen a $55 increase to $3,561 by June. Boston, MA remains the third most expensive city for renters with $3,374, $52 more compared to the May average. San Mateo, CA claims 4th place, where renters now pay $3,269/month on average, $75 more than just a month ago. Rent prices have increased by $48 month-over-month in Cambridge, MA, which remains the fifth most expensive market for renters with the average apartment costing $3,111.

Among the 250 cities analyzed, Wichita still manages to offer the cheapest rents, with an average rent of $639 in June. Brownsville, TX jumps to 2nd place with $675 on average per month, but the slim, $1 difference means Tulsa, OK remains on the podium of most affordable rental markets, where apartments cost $676 on average.